Globalisation glossary

Bilateral trade agreements An agreement between two countries that regulates the terms of trade between them.   Developing country Low-income and middle-income countries in which most people have a lower standard of living and access to fewer goods and services than do most people in high-income countries.   Development Indicator Usually a numerical measure of quality of life in a country. Indicators are used to illustrate progress of a country in meeting a range of economic, social, and environmental goals. Since indicators represent data that have been collected by a variety of agencies using different collection methods, and there may be inconsistencies among them.   Free trade A situation where there are no restrictions on trade between nations. This situation will never exist because nations have very strict rules about trading in some items, such as pornography, or they may ban goods for quarantine reasons, such as meat products from countries with outbreaks of 'mad cow' disease.   Growth rate The change (increase, decrease, or no change) in an indicator over a period of time, expressed as a percentage of the indicator at the start of the period.   Import/Export Quota The amount or the number of goods that can be imported or exported.   Protectionism Protecting domestic producers by impeding or limiting the importation of foreign goods and services. This is done through tariffs or quotas.   Purchasing power parity (PPP) A method of measuring the relative purchasing power of different countries' currencies across the same regimen of goods and services. Because goods and services may cost more in one country than in another, PPP allows us to make more accurate comparisons of standards of living across countries. Since not all items can be matched exactly across countries and time, they are only rough guides.   Subsidies Government grants to local producers to assist in the production of particular crops or goods. Opponents of this kind of assistance argue that it is an inefficient use of resources as it makes the production of certain goods economically viable, when they otherwise would not be. This leads to unfair competition and lower returns for those producers producing the good without assistance, and rewards those whose production processes may be inefficient.   Sustainable development Development that meets the needs of the people today without compromising the ability of future generations to meet their own needs.   Tariffs Taxes placed by a government on imported or exported goods and services.   Total external debt Debt owed to non-residents repayable in foreign currency, goods or services. It is the sum of publicly guaranteed and private non-guaranteed long-term debt, as well as use of IMF credit and short-term debt. Short-term debt includes all debt having an original maturity of one year or less, and interest in arrears on long-term debt.   Trade Trade allows people to buy goods and services that are not produced in their own countries. The money countries receive from exports helps determine how much they can afford to spend on imports, and how much they can borrow from abroad. It can stimulate a country's development and economic growth. This helps create new jobs, raises living standards and gives people an opportunity to take charge of their lives.   Trade liberalisation The movement towards removing barriers that restrict the importation and exportation of goods and services (flow of trade) between countries.   Trade protection Restrictions on the imports of goods and services from other countries in order to protect local producers from overseas competition. This may be through tariffs, subsidies and quality assurance standards, or labelling, safety and packaging requirements.